Community Short Facts - May 2022

Runtime decreases significantly

The duration of mega deals in the IT services industry has fallen by 40 percent over the last twenty years. In 2000, mega deals were still designed to last almost eight years on average. Today, the average duration is less than five years. In general, the industry has seen a trend towards not only shorter but also smaller contracts over the past twenty years - in a growing market overall. The annual contract value (ACV) for mega deals also follows this pattern. Three years ago, mega deals still accounted for 20 percent of the ACV of the entire IT services market. Today, it is only around twelve percent.

This decline is not only due to the fact that ACV has decreased from mega deals. It is also due to the fact that the ACV pie has become bigger overall. For example, the ACV for managed services increased by 16% in 2021 compared to the previous year. A large part of this growth comes from contracts with an ACV of less than 20 million US dollars. These smaller deals now form the backbone of the IT services industry, underpinning the general paradigm shift in the sector. This was reported by the Information Services Group (ISG) on the basis of its own market figures.